SPECIAL FOCUS From page 12

ter outcomes with less expensive products and process improvements?). We’re benchmarking the hospital’s performance against peer hospitals around the country to identify best practices. We’re also facilitating discussions between the surgeons and the hospital’s supply chain team to consider product and process changes that would maintain or improve the quality of care while lowering the costs associated with the procedure. Working cross-functionally to build consensus

and align clinical and business goals is central to Vizient’s service model and an essential part of the value we deliver. An online exchange is not set up to address any of these critically important issues—or to develop this level of trust and partner- ship. Hospitals are clearly looking for these services, and we are far better equipped to deliver them.

From Vizient’s standpoint, how much sense does it make simply to let all of that “group purchasing” business go in favor of clinical consulting, data management, workforce improvement, etc., in much the same way Kodak jettisoned film and IBM jettisoned PCs? We don’t see the “group purchasing” as

separate or standalone transactional business, but rather an essential component of healthcare performance improvement, alongside offerings like clinical consulting, data analytics and manage- ment and workforce, improvement.

What if Vizient’s dedicated hospital customers demanded that Vizient (and other GPOs, respectively) to “be more like Amazon” in your online transactional and logistical capabilities? The services Vizient offers today have been built from insights from healthcare providers on the

ground, and we are always working with our customers so we can evolve to better meet their needs. We maintain a 22-member Board of Direc- tors that includes executives and clinicians from around the country who are directly involved in Vizient’s strategic decisions. It’s also unclear that hospital members want

us to “be more like Amazon” or other online exchanges because health systems don’t make purchasing decisions in the same way general consumers do. Most hospitals use some type of procurement and ordering technology to ensure that the right products are stocked in the right place at the right time. These systems are designed to minimize or eliminate product variations that could increase costs or impact utilization, safety or quality, and many are tied to inventory levels to ensure just-in-time delivery. Many of the transactional and logistical capa- bilities that online exchanges have brought to consumer-retailer relationships are efficiencies that hospitals and GPOs have been developing for years, albeit in ways that are very specific to the healthcare environment. For example, for more than five years we’ve offered our online portal, aptitude, along with procure-to-pay and other online exchange options.

What I hear you saying is that a GPO like Vizient understands its healthcare organi- zation customers better than an Amazon- esque organization would because that organization would be more interested in increasing transactions and moving product more efficiently and satisfying customer demands for quick service? What we are saying is that we continue to be-

lieve that Vizient’s model, supported by the largest volume in the industry, a suite of complementary services/analytics and our long-time provider re-

lationships, can — and does — drive value in the healthcare industry. At the same time, we also believe that the healthcare industry is facing tre- mendous pressure and upheaval, and in response, we continue to look for new and innovative ways to serve the needs of our members and continue our role as their indispensable partners. Hospitals need and expect partnership in problem solving and high levels of support are essential for anyone serving hospitals in this space.

Amazon is exploring how to operate with- in HIPAA guidelines, seemingly portending a much deeper dive into the healthcare in- dustry, which could encompass consumer/ retail and trade. Could not a company like Amazon jump into performance improve- ment and integrated sourcing just like Vizient and other GPOs if it simply hired hospital/IDN/GPO supply chain execs, doc- tors, nurses, etc., just like the dot-coms did nearly 20 years ago? Why? The healthcare industry is rapidly evolving with mergers, acquisitions, and expansions shaping the next phase of care delivery. Over the years, Vizient itself has grown through strategic merg- ers, acquisitions, and service expansions to fully integrate our group purchasing expertise to cre- ate a comprehensive performance improvement company. The good thing about competition is that it

inspires innovation, which ultimately will make the health system stronger. We have been anticipat- ing this move by Amazon for several years, and we continue to watch closely. At the same time, we work closely with our members and suppliers to continue to innovate, improving our product offerings and service delivery to better meet the needs of healthcare providers now and well into the future.

Premier pokes at market competition concerns, touts GPO service

Last November, Premier Inc. issued a public statement in response to speculation that new market entrants will disrupt Premier and other companies that have group purchasing organizations (GPOs) serving the healthcare provider industry. What follows is Premier’s message.

There has been recent speculation that new market participants are contemplating en- trance into the healthcare supply chain with the intent to disintermediate GPOs. Over its more than 20-year history, Premier has evolved from a group purchasing and benchmarking organization, cooperatively owned by our member-owner healthcare providers, into a mission critical partner, offering clinical, operational and administrative solutions and managing over $56 billion in supply chain spend. The transformation of our company has been driven by our member owners’ critical need to harness the collective power of our organizations in solving their most pressing cost, quality and safety issues as they continue their evolution to value-based care.

This alignment is evidenced by their com- mitment and ownership in Premier. As an organization, we continually evaluate our competitive positioning within the marketplace and how to augment our value proposition to our provider partners. Together with our 167 member owners, 3,900 hospitals and health systems, and 150,000 other providers, we are highly confident in our ability to continue to drive the transformation of high quality, cost effective healthcare. Among the many reasons these groups continue to partner with Premier, below is a brief summary. • Premier’s efficient channel is driving optimum savings for providers: Over our history as an organization, we have helped our provider partners save billions of dollars.


The administrative fee charged by Premier to suppliers for our group purchasing services aver- ages approximately 2 percent, some of which is typically distributed back to our providers. Other online companies have comparable supplier-paid fee models in which we believe the transaction fee typically ranges between 5-to-15 percent. Moreover, because Premier is majority owned by healthcare providers and interacts with these member owners in a comprehensive and ongo- ing basis, we believe we have achieved a high level of trust and confidence that is critical when dealing with products and services that impact people’s lives. This includes the regional buying groups and aggregators that Premier works closely with as another means to organize and

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